Living trust??

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Submitted by treehugger on August 14, 2016 - 2:50pm

My grandma is 95, she owns and still ives in her home up in Vallejo. She pays her own bills, with occasional assistance from my mom. For a 95 year old she is still mentally clear.

2 weeks ago she fell down and shattered her femur. She is doing well, but now family is considering her mortality and wondering what is the best way to handle her house into the future? She just came home and is doing well, but what if something else happens and she needs assistance or what if she dies?

My uncle suggested a living trust, but I am not sure that really is the best if she already has her will, the 3 kids each get 1/3 of the house, pretty simple.

I had thought my mom had done a reverse mortgage on grandma's house many years ago and had also been added to the title. My mom is the oldest and is the "executor" of her will and is just in charge in general.....

Mom just called me asking my opinion on a living trust. When I asked a few questions found out no not a reverse mortgage some loan that has about $25,000 left on it at 9% interest rate from 1992. There are also 2 more government loans that my mom is trying to get the paperwork for that she thinks were for $35,000 and $15,000 each. I am not sure what kind they are mom is saying government loan program for seniors that they don't have to pay on, but the interest accrues through the years and now she doesn't know how much they have piled up.

I suggested refinancing to get away from the 9% and pulling money out to pay off the others, but if she has interest accruing and she doesn't have to pay do they come due when she dies? If yes, doesn't seem fair to make them due during her lifetime? Can she refi without disrupting/paying those?

Another option I thought of, but have no idea if feasible, is that she simply add the 3 kids to the title now and when she passes they already own the house and avoid taxes? Then they can pay off whatever loans are outstanding and decide if they want to sell or whatever.

So, my question to the smart kids, any suggestions? What questions do I need answered in order to help my mom and uncles make an informed suggestion to grandma??

Submitted by SK in CV on August 15, 2016 - 9:51am.

Yes to living trust. No to just putting kids on the title. Yes to refinancing unless current net interest on all debt is insignificant and expectation is that grandma isn't going to be around for long and property will be sold afterwards. Yes to living trust. Just for emphasis and in case you didn't catch it the first and second time, yes to living trust.

Submitted by HLS on August 15, 2016 - 11:51pm.

You really need to get legal advice.
The situation now will probably require the estate to be probated.
The minimum charge for an attorney to handle the probate is probably $4000 and can take 6 months to a year to settle.
The house cannot be sold during this period.

A living trust should avoid probate and make transfers possible very quickly. A basic trust can be done with a legal professional for $500-$1000. With basic assets, it's simple.
Anything with legal title should be put into the trust,
house, cars, bank accts etc.

Joint bank accts may not need to go into the trust.
POD (Payable on death) accts may or may not

Adding kids to property title could trigger a reassessment for
property taxes as of date of transfer.

Refinancing doesn't solve the probate issue.
As SK said, get the Living Trust asap AND don't forget to fund the trust (i.e. transfer title of assets into the trust)
make sure it's done correctly.

It will cost a lot less than probate and save months of aggravation

Check this out

Submitted by SK in CV on August 16, 2016 - 12:12pm.

HLS wrote:
Refinancing doesn't solve the probate issue.
As SK said, get the Living Trust asap AND don't forget to fund the trust (i.e. transfer title of assets into the trust)
make sure it's done correctly.

Great addition, I should have included that part. DO NOT FORGET TO FUND THE TRUST!.

I've seen trusts created a dozen times, the trustor dies and nothing was ever put into the trust. It makes the trust worthless. Put all real estate into trust. Put bank accounts and investment accounts into trust. If there are significant other assets of any kind (including valuable personal property) put them into the trust and make sure there is a paper trial recording which assets are being put into the trust, and each transfer must be signed by the grantor of the trust.

And while that's being done, a new will should say that anything that isn't in the trust, goes to the trust upon death, unless previously dealt with. (IRA's and other retirement accounts should NEVER go into the trust.)

Submitted by HLS on August 16, 2016 - 12:29pm.

Realistically it's more difficult to identify personal property in a trust;
jewelry, collectibles, gold. silver, china, collectibles, stamps, coins etc as they often tend to mysteriously disappear after someone's death.

Legally titled assets, real property, vehicles & bank accounts are the important titled assets that should go into the trust.

I think that most trusts these days include a provision for a
'pour over will' meaning anything not explicitly mentioned automatically goes into the trust upon death but the more heirs there are the more disagreement there is likely to be
(i.e. Grandma said *I* could have her bicycle when she died)

A trust doesn't need a bicycle or a washing machine or a ping pong table, etc

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